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Alliance program facilitates goals of cities, developers

By Sascha Brodsky

In 1998 developer Frederick J. Stemmler was picking out the perfect spot in California for his new, 200,000-square-foot center, The Hub, when he ran into a giant snag.

The 25 acres in the city of San Bernardino he had his eye on were occupied. About 100 people were living in 60 dilapidated houses in the area. “The houses were just a mess, unsanitary and dangerous,” said Stemmler, co-managing partner of Street-Manchester, a development firm based in Irvine, Calif. “But no developer could have done anything with the land, because people were living there.”

Stemmler found a solution through ICSC’s Alliance program, which brings together developers and municipal officials in a series of conferences and networking events. After brainstorming at an Alliance meeting, Stemmler hit upon a use for the land — a shopping center — that government officials agreed would benefit everyone. The city employed eminent domain, and The Hub got built last year.

“The city benefited through huge tax increases, and the people who were living there are now living in safe housing,” Stemmler said. “And today we’ve got a beautiful new center.”

Thousands of ICSC members have participated in the Alliance program since the organization launched it 10 years ago. The program is built on a series of 30 meetings held around the U.S. each year, says Cynthia Stewart, ICSC’s director of local government relations. The meetings “are about building relationships and giving the public sector a better understanding of how the private sector works,” she said. Developers often come away from the meetings with tips on incentives municipalities are offering, she says.

But tax breaks are not the only topic of discussion. Another hot subject these days is inner-city development. “As suburban locations become overcrowded with retailers, many companies are looking to the inner city for growth prospects,” said Moss Sidell, a real estate lawyer and ICSC Eastern division co-chairman of the program. “The cities want retail because it builds revenue and creates jobs.”

Another big issue is “smart growth,” as municipalities look for ways to slow urban sprawl. Sidell says many local governments are turning to the program to find areas that already have buildings suitable for retail and are being underutilized, “instead of starting from scratch with raw land.”

As in any area of retail real estate, Alliance participants say making personal contacts is often the most important part of the business. Chicago officials, for example, frequently attend Alliance programs “to build relationships with developers on an informal basis and talk about our common problems,” said Frances Spencer, SCSM, SCMD, Chicago’s assistant commissioner for retail.

Not infrequently, the meetings evolve into brainstorming sessions. Last year at a meeting in Milwaukee, local officials agreed to create a regional marketing organization to draw and retain new businesses, regardless of the county they chose to locate in. The region had been hurting for a long time, because its officials spent all their time fighting one another, Milwaukee Mayor Tom Barrett said at the meeting.

Among the program’s main goals is the easing of traditional tensions between developers and the communities where projects are being built, Sidell says. “We want to create a friendly working environment instead of antagonism,” he said. “Every developer has to go through the public approval process. We try to get everyone on the same page so it shortens the approval process.”

Another goal is to educate brokers about retail spaces at upcoming projects, says Michael G. Stevens, the former president and CEO of the Washington, D.C. Economic Partnership. The city’s new Gallery Place mixed-use center got a lot of leases through the program, says Stevens.

Though developers often attend Alliance meetings to learn how to negotiate the approval process, many municipalities want to learn how to attract more retail. The program helps government officials learn to pitch their towns to developers and retailers, says Cynthia J. Kratchman, a vice president at Boston-based real estate firm Colliers International. “We tell cities how to put together a good package and what it should include.”

But developers, in turn, need to learn to sell their projects to the communities. Local officials say Alliance can help build consensus on projects. “You must get leaders to buy into the vision, such as local chambers of commerce and other groups,” said John Inglesino, a Morris County freeholder, at a recent meeting. “It’s also important for town officials and developers to meet with newspaper editors to discuss the benefits of a project. This will all inoculate developers and the municipal leaders from objectors.”

Builders agree that Alliance contacts can surely help push a project forward. Had it not been for Alliance meetings with San Bernardino officials, Stemmler says, the Hub project might never have been.

“Once we showed them what could be done,” he said, “the city showed the courage to face change.”